Clive Palmer abandons action against CITIC

Clive Palmer has backed off from his attempt to put the Australian subsidiary of his estranged business partner Citic Pacific into liquidation, suddenly withdrawing the legal action and agreeing to pay costs.

Related Quotes

Company Profile

In submissions made the Federal Court, Sino Iron disputes the scale of Mineralogy’s $13.4 million administrative budget, which was $11 million more than expenditure incurred in 2011. Budgets were forecast to rise in 2012 and 2013 based on expansion of administrative functions at Cape Preston port, which did not occur.

“Sino Iron has refused to pay the purported 2014 budget amount because it is disputed; not because Sino Iron is insolvent," the company said in submissions to the court.

The company’s court submission’s also outlines concerns expressed to Mineralogy about the budget process via a letter to Mr Palmer’s company on January 29.

“A budget encompasses more than simply a spreadsheet with numbers in it," Sino Iron wrote.

“A properly prepared budget should include a detailed breakdown of the proposed expenditure together with a justification as to why that expenditure is required and an explanation of how the figures have been derived."

Sino Iron’s submission shows Mineralogy’s budget included $5 million for port operational costs and $4 million for staff costs.

Sino Iron said it had a letter of support from Citic Pacific, which confirms its Hong Kong parent will continue to advance funds. Citic has provided a $US5.6 billion loan facility, of which Sino Iron had drawn $US1.52 billion.

Mineralogy will pay Sino Iron’s costs.

The $11 billion Sino Iron project, which Palmer and Citic signed off in 2006, has been plauged by cost blowouts, delays and building acrimony between the business partners.

Mr Palmer has taken legal action against Citic over the payment of royalties from the project and the pair have fought over who has security over the port through which the magnetite is to be exported.